The payment of Zakat is a religious obligation for Muslims, to make contributions towards the less fortunate. It is one of the five pillars of Islam and is intended to redistribute wealth between the rich and the poor as well as cleanse the wealth of those who pay zakat.
There are two different types of zakat to be paid:
Zakat Fitrah (voluntary tithe paid during the month of Ramadan)
Zakat Harta (tithe on property owned by the Muslim)
Who is eligible to pay Zakat?
Zakat is compulsory ("wajib") for all adult Muslims, whose total annual wealth meets or exceeds the nisab. Below are the conditions every Muslim must meet:
Owns their own wealth
Posses minimum amount of wealth based on the Nisab
Have had wealth in their possession for the minimum haul
Wealth should be of productive nature (can be derived as profit i.e gold, silver etc.)
How to pay for Zakat?
Muslims in Malaysia are encouraged to make their zakat payments to the government’s zakat collection centres for proper distribution to the needy.
One way employees can pay for their zakat is through a Monthly Salary Deduction scheme. In order to avoid a clash with the Monthly Tax Deduction (or Potongan Cukai Bulanan) for income tax, employers can make adjustments so that the monthly zakat deduction is taken from the monthly tax deduction.
There are several ways on how you can pay Zakat:
Lembaga Zakat Selangor branch
At the bank counter
Monthly salary deduction scheme
Employees/Employers can check with respective state’s official zakat website for legitimate methods of payment.
How to Process Zakat in Talenox?
Here's how you can process Zakat in payroll based on the 2 scenarios below:
1) If you'd like to have your employees pay for Zakat themselves via the relevant means
If your employees are to handle the payment for Zakat themselves, it is not mandatory for the employer to deduct the amount from employee's monthly salary.
However, you will have to request your employees to let you know the monthly Zakat amounts paid out by them. This is because Zakat payments will affect PCB/MTD calculations (based on the formula).
Hence, it's important for you to know how much they have paid out each month and include this amount as a pay item in Step 4 - Select Tax Deductions and BIK/VOLA (non-monetary):
By including your employee's paid-out zakat payments into the system, this will ONLY help with calculation of PCB for the month but will not actually deduct anything from employee's salary.
2) If you want to process Zakat payments in employee payroll and have it deducted from their salary
You'll just have to include this Zakat Deduction in payroll under Step 3 - Select Pay Item, under the Ad Hoc Payment/Deduction tab:
This will ensure that the Zakat payment will deduct from the employee's net salary as well as contribute towards PCB calculations in Talenox for the employee. 😎